Hurtin' IRNE

Legal warfare besieges city phone system.

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Major telecom companies are trying to kick the City of Portland out of a business most citizens don't know it's in: telephone, Internet and wireless service.

Federal lawsuits filed by TimeWarner and Vancouver, Wash.-based Electric Lightwave have cost the city $230,000 in attorney costs so far. And Qwest's attempt to link the issue to a third case (a many-tentacled fight over franchise fees) has cost Portland another $574,300.

Portland jumped into the phone business in 2000 and 2001 when city and state transportation gurus aimed to improve traffic-efficiency communications. As often happens when frisky bureaucrats meet, one thing led to another-and today the city runs its own small telecom operation.

The Integrated Regional Network Enterprise (in acronym-speak pronounced "Ernie," like Bert's Sesame Street roomie) sells phone, Internet and other services at cost to city bureaus and other government bodies. Portland Public Schools, for instance, cut the number of traditional phone lines needed by high schools roughly in half by switching to IRNE's voice-over-Internet service.

"We're able to deliver services that we couldn't if IRNE didn't exist," says Scott Robinson, chief technology officer for Portland schools. "If IRNE went away, we'd have to use commercial vendors at three times the price."

Funny Robinson should mention that, because that's exactly what Qwest, TimeWarner and other telecoms want to happen. The megacorps that run fiber-optic cable under Portland's city streets are demanding, in three separate lawsuits, that courts shut IRNE down.

Qwest and its compatriots accuse the city, essentially, of extortion. To use public rights-of-way, the telecoms must sign franchise agreements requiring the companies give certain equipment to the city on top of fees-underground conduits, fiber and other communications raw ingredients. The city uses that equipment to run IRNE. The telecoms claim that's against federal law.

The three cases fit into a national battle pitting major telecoms against cities wanting to build their own fiber-optic and wireless systems. But they also reflect the city's bitter relationship to the companies that provide phone, cell, cable and Internet service.

Qwest's attempt to destroy IRNE is a new development in an already epic lawsuit Qwest filed to whack the city's franchise fees. (Qwest added claims against IRNE to the case-which has already bounced around federal courts.)

Meanwhile, TimeWarner-which took over Enron's broadband network-joined with Qwest and another company in a second suit, making almost identical arguments for IRNE's elimination. And the city itself is suing the telecom Electric Lightwave over its refusal to pay franchise fees-prompting Electric Lightwave to respond with a claim that IRNE is illegal. Those cases are pending before different judges in Portland's federal district court.

The city attorney's office declined to comment on the legal storm around IRNE. But at least one customer hopes Portland's obscure government-run phone company survives.

"I buy from everyone in the marketplace because I have a complex network," says Mark Gregory, Portland State University's technology director. "They city offers services the other telecoms can't match for the price."